Airbnb Is Spending Millions of Dollars to Make Nightmares Go Away

(Bloomberg Businessweek) -- The first-floor apartment on West 37th Street, a few blocks south of Times Square, was popular with tourists—so popular that a set of keys was left at the counter of a nearby bodega for Airbnb renters to pick up. That’s where a 29-year-old Australian woman and a group of her friends retrieved them, no identification needed, when they arrived in Manhattan to celebrate New Year’s Eve in 2015. The apartment had been advertised on Airbnb even though most short-term rentals are illegal in New York. The city, prodded by powerful hotel unions, was at war with the company, which was listing thousands of apartments in the five boroughs despite some of the strictest regulations in the country..Soon after ringing in the new year, the woman left her friends at the bar where they’d been celebrating and returned to the apartment on her own. She didn’t notice anything amiss or see the man standing in the shadows as she walked into the bathroom. By the time she realized she wasn’t alone, the blade of a kitchen knife was pointing down at her. The stranger grabbed her, shoved her onto a bed, and raped her. Drunken revelers were wandering the streets outside, but the woman was too scared to scream..The attacker fled with her phone, but she managed to reach her friends with an iPad, and they ran into the street to find a police officer. The cops were already in the apartment an hour or so later when the man returned and peered into the doorway. They caught him and emptied his backpack, pulling out three incriminating items: a knife, one of the woman’s earrings, and a set of keys to the apartment..That morning a call came in for Nick Shapiro. A former deputy chief of staff at the Central Intelligence Agency and National Security Council adviser in the Obama White House, Shapiro was two weeks into a new job as a crisis manager at Airbnb Inc. “I remember thinking I was right back in the thick of it,” he recalls. “This brought me back to feelings of confronting truly horrific matters at Langley and in the situation room at the White House.”.Shapiro notified other Airbnb executives, including Chief Executive Officer Brian Chesky. Meanwhile safety agents from the company’s elite trust-and-safety team sprang into action. They relocated the woman to a hotel, paid for her mother to fly in from Australia, flew them both home, and offered to cover any health or counseling costs..The duplicate keys posed a particular problem for the company and a mystery for investigators. How had the man gotten them? Airbnb doesn’t have a policy for how hosts exchange keys with guests, and its reputation for safety, and possibly its legal liability, hinged on the answer. Shapiro (who’s since left the company) helped coordinate an investigation into the matter..A week later, a staff member was sent to court to see if Airbnb was mentioned during a proceeding. It wasn’t. The local media didn’t report on the crime either, despite the lurid details, and the company wanted to keep it that way. The story remained unreported until now, in no small part because two years after the assault Airbnb wrote the woman a check for $7 million, one of the biggest payouts the company has ever made. In exchange she signed an agreement not to talk about the settlement “or imply responsibility or liability” on the part of Airbnb or the host..Details of the crime, the company’s response, and the settlement were reconstructed from police and court records and confidential documents, as well as from interviews with people familiar with the case. The woman, whose name was redacted in court documents and who asked through her lawyer not to be identified, declined to comment. So did her lawyer. Ben Breit, an Airbnb spokesman, says that the company doesn’t have the power to keep stories out of the media and that, despite the wording of the settlement agreement, the woman “is able to discuss whether she holds anyone responsible.” He adds that Airbnb’s goal following the incident was to support the survivor of a “horrific attack” and that local political issues had nothing to do with its response..The way Airbnb has handled crimes such as the New York attack, which occurred during a bitter regulatory fight, shows how critical the safety team has been to the company’s growth. Airbnb’s business model rests on the idea that strangers can trust one another. If that premise is undermined, it can mean fewer users and more lawsuits, not to mention tighter regulation..For all its importance, the safety team remains shrouded in secrecy. Insiders call it the “black box.” But eight former members and 45 other current and former Airbnb employees familiar with the team’s role, most of whom spoke on condition of anonymity for fear of breaching confidentiality agreements, provided a rare glimpse into its operations and internal struggles. The job, former team members say, is a nerve-wracking one, balancing the often conflicting interests of guests, hosts, and the company. “I had situations where I had to get off the phone and go cry,” a former agent recalls. “That’s all you can do.” .Founded in 2008 by design students Chesky and Joe Gebbia, along with engineer Nate Blecharczyk, Airbnb has grown from a funky couch-surfing alternative to one of the biggest hospitality companies in the world, with 5.6 million listings, more than the number of rooms in the top seven hotel chains combined. Its $90 billion market value—the share price has doubled since the company went public in December—shows just how much progress the founders have made in wooing investors since their ramen days. One of the first Silicon Valley venture capitalists they pitched was Chris Sacca, an early backer of Instagram, Twitter, and Uber. After their presentation, Sacca later recalled, he pulled them aside and said, “Guys, this is super dangerous. Somebody’s going to get raped or murdered, and the blood is gonna be on your hands.” He didn’t invest..From the outset, Airbnb has encouraged strangers to connect online, exchange money, and then meet in real life, often sleeping under the same roof. It’s somewhere between a tech platform and a hotel operator—unable to disavow responsibility for ensuring its users are safe, as some tech companies might, or to provide security guards and other on-site staff, as a hotel would. What makes trust and safety at Airbnb more complicated than at Apple or Facebook “is that you are dealing with real people in real people’s homes,” says Tara Bunch, Airbnb’s head of global operations. Bunch has overseen the safety team since being hired away from Apple Inc. last May. “People are naturally unpredictable, and as much as we try, occasionally really bad things happen,” she says. “We all know that you can’t stop everything, but it’s all about how you respond, and when it happens you have to make it right, and that’s what we try to do each and every time.”.In the early days, the co-founders answered every customer service complaint on their mobile phones. When that became unmanageable, they hired support staff to field calls. It wasn’t until three years in, after more than 2 million booked stays, that the company faced its first big safety crisis. In 2011 a host in San Francisco blogged about returning from a work trip to find her home ransacked. Her “guests” had trashed her clothes, burned her belongings, and smashed a hole through a locked closet door to steal her passport, credit card, laptop, and hard drives, as well as her grandmother’s jewelry..In a follow-up post, the host wrote that an Airbnb co-founder had contacted her and, rather than offering support, asked her to remove the story from her blog, saying it could hurt an upcoming funding round. Soon #RansackGate was trending on Twitter, and the incident snowballedinto a crash course in crisis management. The result: a public apology from Chesky, a $50,000 damage guarantee for hosts (since increased to $1 million), a 24-hour customer-support hotline, and a new trust-and-safety department..As Airbnb grew, so did the number of dangerous incidents—everything from hosts hurling suitcases out of windows to concealed cameras, gas leaks, and sexual assaults. Many of the crimes taking place inside short-term rentals listed on its platform and others could have happened in any apartment or hotel room. But in some cases hosts used the platforms to commit them. In one October 2011 incident, an Airbnb host in Barcelona plied two American women who’d booked a stay at his home with alcohol, then raped them. When the women went to the police the next morning, the host threatened to upload videos of the attack to the internet if they didn’t drop the case, according to local media reports. Police searched his apartment and found hundreds of similar photos of other victims. The man received a 12-year prison sentence. Airbnb, which declined to comment about the case for this story, paid the two women an undisclosed amount and banned the host for life..By 2016 the safety team was overwhelmed with calls, many of them minor in nature, and Airbnb started training contractors in call centers around the world to handle the flood of complaints. Airbnb says that fewer than 0.1% of stays result in a reported safety issue, but with more than 200 million bookings a year, that’s still a lot of trips with bad endings. Only the most serious problems are transferred to the internal safety team..That team is made up of about 100 agents in Dublin, Montreal, Singapore, and other cities. Some have emergency-services or military backgrounds. Team members have the autonomy to spend whatever it takes to make a victim feel supported, including paying for flights, accommodation, food, counseling, health costs, and sexually transmitted disease testing for rape survivors. A former agent who was at Airbnb for five years describes the approach as shooting “the money cannon.” The team has relocated guests to hotel rooms at 10 times the cost of their booking, paid for round-the-world vacations, and even signed checks for dog-counseling sessions. “We go the extra mile to ensure anyone impacted on our platform is taken care of,” Bunch says. “We don’t really worry about the brand and image component. That stuff will take care of itself as long as you do the right thing.”.Former agents recall cases where they had to counsel guests hiding in wardrobes or running from secluded cabins after being assaulted by hosts. Sometimes the guests were the perpetrators, as with an incident when one was found in bed, naked, with his host’s 7-year-old daughter. Agents have had to hire body-fluid crews to clean blood off carpets, arrange for contractors to cover bullet holes in walls, and deal with hosts who discover dismembered human remains..The work can be so stressful that agents have access to cool-down rooms with dimmed lighting to create a soothing atmosphere for answering harrowing calls. And it can take a heavy toll. Some former agents say they suffer from vicarious trauma. On the job they tried to remember that everything that happens in life can happen in an Airbnb. That perspective was drilled into new recruits during 12-week training sessions: Just as nightclubs can’t eliminate sexual assaults and hotels can’t stop human trafficking, Airbnb can’t prevent bad actors from using its platform..The company says its safety agents are taught to prioritize customers in crisis, yet many understood themselves to have a dual role to protect both the individual and Airbnb’s public image. In sensitive cases, according to some former agents, they were encouraged to get a payout agreement signed as quickly as possible. Until 2017, other insiders say, every agreement came with a nondisclosure clause that barred the recipient from talking about what had happened, making further requests for money, or suing the company. That practice ended when the #MeToo movement showed how nondisclosure agreements were being used to shield high-profile individuals and companies from fallout over allegations of misconduct. Airbnb replaced the NDA section of its payout agreement with a narrower clause that says recipients can’t discuss the terms of their settlement or imply that it’s an admission of wrongdoing..The company declined to comment on the terms of settlements, or the safety team’s budget. But a confidential document seen by Bloomberg Businessweek shows that in recent years, Airbnb spent an average of about $50 million annually on payouts to hosts and guests, including on legal settlements and damage to homes. (The company says that most of its payouts are related to property damage under its host-guarantee insurance program, and that even six-figure settlements are “exceptionally rare.”).Former safety agents also describe tension with the trust side of the department, whose job is to develop policies to prevent bad things from happening, whether it’s bed bugs, loaded guns, or kidnappings. Safety agents, who clean up only after disaster strikes, say they felt like the unloved side of the department. There was also tension between the safety and sales teams about professional hosts who manage multiple properties and whose removal from the platform for a safety violation could cost Airbnb hundreds of listings..The hardest part of the job, the former agents say, was making peace with their role in keeping cases quiet and ensuring that victims and their families didn’t blame the company. Sometimes they were told to prioritize less traumatic situations involving reality-TV stars and others with big social media followings, which they say made them uncomfortable. Breit, the Airbnb spokesman, says that all safety incidents are treated “appropriately and consistently.” .Like many Silicon Valley companies, Airbnb rose on the strength of a growth-at-all-costs ethos—rolling into cities, skirting regulations, winning the popular vote, and catching on so fast that by the time officials noticed what was going on, they had no chance of controlling it. Regulatory battles blew up around the world, the most toxic of which played out in New York in 2015. The city conducted sting operations to expose illicit rentals of shorter than 30 days and ordered the company to provide addresses of its listings, sparking years of legal fighting. Airbnb hired opposition researchers to dig into the backgrounds of its critics and paid for attack ads..In early 2016, after the assault near Times Square, safety agents did what they were trained to do: provide comfort and assistance to the victim. But the possibility of a lawsuit raised the stakes. Chris Lehane, a former political operative for President Bill Clinton, had been hired by Airbnb as head of global policy and communications a few months before the incident. Company insiders say Lehane, the author of Masters of Disaster, a 2014 book about “the black art of damage control,” was afraid the case could be used by opponents to run Airbnb out of town. (Lehane declined to be interviewed.).The issue with the keys wasn’t easily addressed. Arrangements such as the one used by the host on West 37th are common in the short-term rental ecosystem—a luggage store next door to the building advertised itself online as a “convenient spot for picking up Airbnb lockbox keys.” But these practices can be dangerous, with keys passing through an unknown number of hands..William Delaino, a long-term tenant on the third floor of the West 37th Street building, recalls that the woman’s friends rang his buzzer that night after getting no answer from her. “There were quite a few Airbnb units in the building, and I was used to this kind of thing from foreign travelers,” he says. He estimates that 4 of the building’s 12 units were being rented out on Airbnb at the time. Its owner, Kano Real Estate Investors LLC, declined to comment. But after the attack, tenants say, it updated its leases to forbid them from listing their apartments on Airbnb..Detectives were lucky that the alleged rapist, Junior Lee, had returned with the keys. He was charged with predatory sexual assault, which carries a maximum sentence of life in prison. A prosecutor told the judge that Lee, 24, was a “career criminal” with 40 misdemeanor convictions, according to court transcripts. Lee pleaded not guilty, and bail was set at $250,000..Airbnb escaped mention not only in the media and in the indictment but also in the police report and the complaint filed by prosecutors. Nor is there anything in the public record about how Lee got the keys. His Legal Aid lawyer, Evan Rock, declined to comment on the case. Lee, who’s been deemed mentally unfit, is in custody awaiting further examination, but even if he goes to trial it’s not clear whether the company’s role will be an issue, or whether the mystery of the keys will ever be solved.. Listen to Bloomberg’s Olivia Carville discuss her story on Bloomberg Radio .Airbnb’s potential liability for not enforcing a stricter key-exchange policy won’t be an issue thanks to the $7 million settlement, which came about after the woman’s lawyer, Jim Kirk at the Kirk Firm in New York, sent a letter threatening legal action. Although the settlement doesn’t bar the woman from cooperating with prosecutors, it does prevent her from blaming or suing the company. That was especially important for Airbnb because the woman wasn’t the one who’d rented the apartment, so she hadn’t signed the company’s 10,000-word terms of service agreement—another important way Airbnb keeps incidents out of court and out of the public eye..Anyone registering on the site is required to sign this agreement, which bars legal claims for injury or stress arising from a stay and requires confidential arbitration in the event of a dispute. Former safety agents estimate the company handles thousands of allegations of sexual assault every year, many involving rape. Yet only one case related to a sexual assault has been filed against Airbnb in U.S. courts, according to a review of electronically available state and federal lawsuits. Victims’ lawyers say the terms of service are an important reason..The case that did make it through was filed in 2017, when Leslie Lapayowker, a 51-year-old woman, sued Airbnb after allegedly being assaulted by a host in Los Angeles. Lapayowker was moving to the city from New Mexico and had booked a 30-day stay while she searched for an apartment, according to court documents. The lawsuit says that after she decided to leave because of the host’s bizarre behavior, he followed her into the studio unit she’d rented, locked the door, held her in a chair against her will, and masturbated in front of her, ejaculating into a trash can. As Lapayowker fled, according to the complaint, the host said, “Don’t forget to leave me a positive review on Airbnb.” The man, who said the encounter was consensual, wasn’t charged..Lapayowker’s lawyer, Teresa Li, says the suit was able to proceed, despite the arbitration requirements in Airbnb’s terms of service, because the company hadn’t done a thorough background check of the host. Airbnb only flags prior convictions, and though the host had previously been charged with battery, he wasn’t convicted..In her filing, Li argued that Airbnb created a false sense of security by using the words “trust” and “safety” on its website. The company moved to settle, offering Lapayowker an undisclosed amount of money in exchange for dropping the case. It also banned the host from its platform. Airbnb declined to comment, as did Lapayowker. Li says she’s barred from discussing the negotiations or the amount her client received. She’s also settled another assault case against the company, brought by a U.S. citizen raped in India by a host’s relative who was out on bail after being charged with murder..A similar process played out when the family of Carla Stefaniak, a Florida woman murdered while celebrating her 36th birthday in Costa Rica in 2018, filed a lawsuit against the company later that year. Stefaniak’s decomposing remains were discovered half-buried and wrapped in plastic about 1,000 feet from her Airbnb rental. A security guard at the complex where she was staying was convicted of her murder. The suit claimed that Airbnb had failed to perform a background check on the security guard, who was working in the country illegally. The company settled the case for an undisclosed amount..The result of all these settlements, combined with the terms of service provisions that prevent lawsuits in the first place, is that the courts have never established the extent to which short-term rental operators might be liable, if at all, for crimes that take place in the properties they list. “The law around these platforms is unclear,” Li says. “Everything is getting sent to arbitration, so nobody really knows.” .Airbnb’s desire for secrecy also makes it difficult to understand what impact short-term rentals have on the overall safety of neighborhoods. The company doesn’t make the addresses of listings public, to protect the safety and privacy of its users. And though some U.S. cities require hosts to list their units on short-term-rental registries, most don’t release the data, citing the same privacy concerns. Those that do often don’t disclose apartment numbers, making it all but impossible to check many addresses against police calls or arrest records. The registries also don’t include units rented illegally..Businessweek obtained registries for Austin, Miami Beach, and Los Angeles through public records requests, seeking to cross-reference them with public databases of police calls or crimes. Police responded to thousands of incidents at short-term rentals in the three cities over the past two years. In Miami Beach, the registry showed 1,071 police calls to addresses listed in 2019, including 40 for violent crimes. But police reports don’t say which platform the unit was on or whether it was being rented at the time, making it difficult to draw useful conclusions about the correlation between the short-term rental industry and crime. Academic researchers say similar limitations have frustrated their efforts to study the link. Only about a half-dozen scholarly studies have been carried out on the subject, and their findings are contradictory..With cities and police forces unable to gather data, and with cases rarely reaching the courts, high-profile incidents have tended to drive the political conversation around short-term rentals. Mindful of this, since 2018, Airbnb has escalated such incidents to its global crisis management team, which was formed by Lehane and other executives and initially headed by Shapiro, the former CIA official. Airbnb “can’t control everything,” says Shapiro, who now runs his own consulting company. “But after something bad happens, how they respond to make it better or not is 100% in their control, and they can’t mess that up.”.Several deadly incidents took place in 2018 and 2019, in addition to Stefaniak’s murder, as the company was gearing up for an initial public offering. One was in November 2018, when a retired New Orleans couple died after inhaling toxic fumes while they slept at an Airbnb in Mexico. Their son appeared on television afterward, pleading for Airbnb to do more to protect its users..Chesky, who declined to be interviewed for this article, wanted to know why cases like this kept landing on his desk and why the company was mishandling or delaying its safety responses, according to people familiar with his reaction. The answer to the second question was that the safety team was understaffed. When executives realized this, a shakeup ensued. In early 2019 the safety team was split from trust, placed under the community-support division, and given additional engineering resources and staff..But tragedies kept happening. That May six Brazilian tourists, two of them children, died of carbon monoxide poisoning inside an Airbnb rental in Santiago, Chile. A relative had called the company before they died, but the response was delayed because no one at the call center spoke Portuguese. Chesky was furious, former employees say..Then, that Halloween, Airbnb faced one of its deadliest incidents: a shootout at a $1.2 million four-bedroom home in Orinda, Calif., about 20 miles east of San Francisco. The house, which had been the subject of numerous complaints to police and the city, had been booked for one night. The guest, who’d been reported to Airbnb for leaving a bullet at another listing just days before, triggering an internal safety warning, then advertised a “mansion party” on social media. More than 100 people were there when a gunman opened fire, killing five..Chesky expressed his condolences via Twitter and announced new safety measures, including a ban on party houses and a promise to verify the photographs, amenities, cleanliness, and safety of all the listings on Airbnb. (This effort is still under way.) But the company didn’t reach out to the mother of one victim, 23-year-old Raymon Hill, for a week, until her lawyer, Jesse Danoff, wrote a letter and issued a statement criticizing Airbnb for providing little more than prayers. Even some of the company’s own safety agents were upset. They say that party houses had been a problem for years..Airbnb subsequently offered to pay for the funerals, but Danoff says that when some of the families sent bills of more than $30,000, the company started haggling. “They don’t care anymore, because the news cycle has moved on,” Danoff says. “The only thing that really motivates them is the threat or potential threat of bad PR or a nightmare in the press.” (Airbnb says it paid the bills. Danoff says he’s still negotiating a settlement.).“They need to be held accountable for what happened,” Hill’s mother, Cynthia Taylor, says of Airbnb. “My son’s life was taken away at a property they allowed to keep renting on their service after multiple complaints.”.That December, Airbnb announced $150 million of additional trust-and-safety spending. It’s introduced a 24/7 hotline that offered renters immediate access to a safety agent; created a system to flag high-risk reservations; banned users who were under 25 and didn’t have a history of positive reviews from booking an Airbnb in the area where they live; and stopped allowing one-night stays over Halloween, July Fourth, and New Year’s Eve. Many of these measures were focused on the U.S.—rolling them out globally has been a challenge, given differing cultures, customs, and regulations in the 191 countries where Airbnb operates. The company has also debated whether to force users to provide government-issued identification, but it decided against doing so to avoid excluding hosts and guests in countries where ID is difficult to obtain..In early 2020, the pandemic hit, wiping out travel as countries closed borders and the world went into lockdown. Airbnb lost 80% of its business in eight weeks. The safety team was inundated with calls relating to infections. To make matters worse, professional party promoters started turning Airbnb rentals into nightclubs, offering live DJs and bottle service. Hundreds of intoxicated, unmasked revelers were let loose in U.S. suburbs, straining police resources, infuriating public health officials, and overwhelming the safety team..Last May, Chesky cried into his webcam during a companywide meeting at which he announced that 25% of the workforce would be cut. The layoffs were expected. What came as a shock to many was that the entire safety team in Portland, Ore., including 25 of the company’s most experienced agents, was let go. Some were told they could keep their job if they took a pay cut and moved to Montreal, where Airbnb was relocating its North American safety operations, lured by favorable tax breaks and lower real estate and labor costs..In emails and question-and-answer sessions with employees, Chesky was criticized for betraying the Airbnb community and its safety agents, who said they’d laid their mental health on the line for the company. He acknowledged the misstep and offered to rehire some of the agents temporarily, at time-and-a-half pay, until the Canada-based team was fully trained. About 15 returned..None of this was reported at the time, and it didn’t interfere with the IPO. After trading opened in December, Airbnb scored one of the biggest first-day rallies on record, boosting the wealth of each founder to more than $10 billion. Sacca, the investor who’d rejected the startup 13 years earlier, tweeted his congratulations. “I let the worst case keep me from seeing the likely case,” he wrote. “Every platform will have some bad actors, but most humans are good people. They knew that. I didn’t listen.”.Airbnb still has safety crises to face, assaults to respond to, and regulatory battles to fight. On May 31, as part of an agreement to settle a lawsuit with New York City, the company started turning over information about its hosts, including names, addresses, and whether they’re renting their entire apartment. The data will make it easier to track illegal listings..More than five years after the attack on West 37th Street, Airbnb still hasn’t set any clear rules regarding keys. The case set off a yearslong internal debate about keyless entry. If hosts could be compelled to use digital keypads and change the code after each stay, a situation like that might be avoided in the future. Even requiring them to disclose whether they had keypad entry could make a difference. Shapiro, the former head of crisis management, recalls pushing for more keyless entry. “I remember trying to talk about the key-exchange process and ways to prevent hosts leaving them at shops,” he says..In the end, little was done beyond posting information about keyless entry online and working with several lockmakers to reduce the cost of implementation. Doing more would have been difficult because Airbnb can’t dictate how hosts enter their own homes, and it might have discouraged them from listing on the platform. The business case won out. You can see the evidence in cities around the world: small lockboxes hanging on fence railings, ready for the next Airbnb guest to collect their key. —With David Ingold Read next: Jimmy Buffett Opens His $370 Million Monument to Frozen Drinks.©2021 Bloomberg L.P.

Airbnb Is Spending Millions of Dollars to Make Nightmares Go Away

Inside Airbnb’s “black box” — how a secretive safety team (and $50 million in payouts) helps the company keep bad things quiet.

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